Published March 31, 2011
The United Nations has admitted that it lost at least $600,000 after it cancelled its controversial rental of a comfortably appointed cruise ship for U.N. staffers in the early stages of rescue operations last year in earthquake-shattered Haiti.
The world organization abruptly backed out of the deal after a Fox News exclusive analysis showed that the boat rental for the 11,000-ton ship called Ola Esmeralda, which cost $72,000 per day, was vastly overpriced compared to going commercial rates.
Overall, the U.N. contracted to spend $13 million on rental of the Esmeralda, and another $3.6 million on a companion vessel, the Sea Voyager—which was known to U.N. staffers as “the Love Boat.”
Even though it discontinued service on the Ola Esmeralda before its contract ended in August 2010, the U.N. apparently was stuck with paying the entire bill. Buried in a summary of U.N. internal auditors’ reports for 2010 is an admission that due to the nature of the contract that the U.N. had signed with the owners, who have close ties to the Venezuelan government of Hugo Chavez, “there was unfortunately no legal basis” for getting back any money for the unused portion of the contract.
Indeed, the loss may have been significantly more than the $600,000 cited in the report, which covered only unused fuel. The carefully worded reference says that the U.N. had paid for “services related to staff accommodations,” including the $600,000 fuel tab, “which were not fully rendered or were discontinued during the contractual period.”
According to the analysis by Fox News, a wide variety of services on the Ola Esmeralda—more than just fuel-- were being paid for at higher-than-market rates. These included hot meals, laundry service and other amenities.
A shipping expert consulted by Fox News estimated that the overall cost of the Esmeralda’s contract with the U.N. was as much as 100 percent more than what normally would be charged in the commercial marketplace. In all, he estimated, the owners of the vessel were getting anywhere from $11,000 to $19,000 a day more than normal rates for the ship.
Using that expert’s figures as a baseline, the auditors’ careful phrasing could mean that much more money—perhaps in the hundreds of thousands of dollars—was also not recoverable.
The auditors’ report says that the U.N.’s department of field support, which provides logistical backup to peacekeeping missions, was chalking the losses up to “lessons learned, to be applied to any future cases involving similar requirements.”
George Russell is executive editor of Fox News.